Price Freeze Expected in Israel

June 20, 1973

JERUSALEM (Jun. 19)

Reliable sources said today that the government has already decided to freeze prices for a period of six months and that only the extent of the freeze remains to be determined. That will be the task of a ministerial committee appointed by the Cabinet Sunday to study anti-inflation measures, the sources said.

The Cabinet’s deputy spokesman, Michael Nir, told newsmen that there had been no decision on the principle of a freeze and that the committee was only to draft contingency plans. But knowledgeable sources said today that the committee, headed by Finance Ministry director general Avraham Agmon, will recommend a freeze on many commodities and that the government fully intends to accept this recommendation.

Histadrut has been calling for a price freeze for months and also demands a mid-year cost-of-living allowance payment to compensate workers for rising prices. The Manufacturers Association has been vigorously opposing both a price freeze and COL payments. While they appear prepared to yield on the latter, they are still fighting a price freeze.

Peleg Tamir, a spokesman for the Association, said today that a COL allowance and a price freeze would pull the economy in opposite directions. He said that if the prices of goods are fixed at the same time that consumers have more disposable income, a spending spree for services would result, exacerbating inflation.

Government economists argue, however, that a price freeze combined with more money in peoples’ pockets will have a psychological effect to reduce the impulse to spend.

DOCTORS’ STRIKE CONTINUES

Sources said that the level at which commodity prices are pegged will be determined by agreements between the government and producers. The agreements will have the force of law and where no agreement can be reached, the government will fix prices under special laws, the sources said.

The freeze is not expected to apply to commodities such as fruits and vegetables which are subject to seasonal price changes; nor can privately built apartments be effectively frozen in price. Flats built by public companies will, however, be frozen.

The freeze is also expected to apply to such services as barbers and laundries but private doctors’ and lawyers’ fees will not be frozen, the sources said.

The doctors’ strike continued today but the week-old strike of radio and television broadcasters ended last night after a seven-hour negotiating session. The agreement reached between the journalists association and the government provides broadcast journalists with the same wage increases that were recently won by privately employed journalists. The dispute over promotion practices was not resolved and will be left to Histadrut to decide.

MINISTER CONFIRMS FREEZE

Labor Minister Yosef Almogi confirmed in the Knesset today that the government was resolved to freeze prices on what he called “popular commodities.” a term he didn’t define.

He said there would be no freeze on such basics as bread, fish, meat and milk on which prices were fixed some time ago, or on luxury goods.

Almogi spoke in reply to two motions of no-confidence by the opposition Gahal and Free Center factions which blamed the government for “the anarchy pervading the economy.” Both motions were defeated by a 55-23 vote.

Almogi said a measure of the government’s responsible approach was its refusal to surrender to the excessive wage demands of striking public employes even though this is an election year. He warned that a sharp increase in wages would have serious repercussions that would work to the disadvantage of wage-earners.